Replace ‘service charge’ on bills with ‘staff contribution’, says Delhi HC

While the FHRAI accepted the court’s direction, the NRAI said the terminology cannot be replaced

Updated - September 06, 2023 01:36 am IST

Published - September 06, 2023 01:31 am IST - New Delhi

The High Court listed the matter for further hearing on October 3.

The High Court listed the matter for further hearing on October 3. | Photo Credit: FILE PHOTO

The Delhi High Court has asked the members of a hospitality industry body to use the term ‘staff contribution’ instead of ‘service charge’ for the amount they charge patrons.

The direction on Tuesday came while hearing petitions against guidelines prohibiting hotels and restaurants from automatically levying ‘service charge’ on food bills.

Justice Prathiba M. Singh directed the Federation of Hotels and Restaurant Associations of India (FHRAI) to clearly specify this charge on menu cards, adding that this amount should not be over 10% of the bill. “They (restaurants) will make it clear that it is not a levy by the government,” she added.

The Central Consumer Protection Authority (CCPA) had on July 4, 2022, banned restaurants and hotels across the country from adding ‘service charge’ to food bills.

The National Restaurant Association of India (NRAI) and the FHRAI subsequently challenged the decision in the High Court, which stayed the CCPA order on July 20 that year.

Justice Singh on Tuesday said ‘staff contribution’ “shall not be more than 10% excluding GST”, adding that it was only an interim order, subject to the final outcome in the petitions.

The FHRAI said it did not have any objection to using the term ‘staff contribution’. However, the NRAI said ‘service charge’ was the accepted terminology that cannot be replaced and there was no confusion with respect to its use.

Taking note of the submission, the court listed the matter for hearing on October 3.

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